14th Finance Commission: A trust-based approach towards local governments
March 2018
The 14th Finance Commission has been hailed as ‘path-breaking’ for recommending larger fund allocations to state governments and giving them more autonomy in spending these funds. In this article, Meera Mehta and Dinesh Mehta highlight that the Commission has also recognised the need to trust and respect local government bodies, and has allocated much larger funds to them. Will this approach work and will state governments cooperate?
The 14th Finance Commission (FC) has been hailed for its path-breaking recommendations in ‘cooperative federalism’1 with a significant increase in the share of state governments in the divisible pool2. What has not been recognised is the fact that the 14th FC has also been quite generous in recommending a larger grant to local governments (includes Panchayati Raj Institutions (PRIs) and Urban Local Governments (ULGs)). The allocation to local governments is over twice the amount recommended by the 13th FC, and for ULGs it is nearly three times relative to the 13th FC recommendations.
You can read the paper here.
